Alan Tsen, the chair of FinTech Australia told Business Insider that the industry is proud of what has been achieved across many policy areas such as equity crowdfunding, open banking, comprehensive credit reporting, and the removal of double GST for digital currency.

However, the one that most fintech companies are excited about is the open banking regulation.

Open banking, a subset of Australia’s new Consumer Data Right regulations, encourages four major banks in the county to make data about their customer’s card, deposit, and transaction accounts available to different services (such as fintech companies) by July next year, via Application Programming Interface (APIs)

Mortgage data is expected to be shared as well — by February 2020.

However, this data can only be made available to other services with the permission of customers. Of course, customers will also have the right to revoke that permission, at will.

APIs are like fiber optic cables that allow the flow of information between different digital systems.

“APIs will revolutionize the efficiency and speed at which payments are made by giving FinTechs easier and cleaner access to user accounts, with real-time updates and the ability to process transactions,” said Western Sydney University Corporate Law and Governance Lecturer Grace Borsellino recently.

“Open Banking will allow businesses, such as Amazon or Whatsapp, to offer financial services and products directly through their platforms, rather than through banking sites. This already happens in China via the social networking platform WeChat,” Borsellino added.

Obviously, the government is careful about how data will be shared via APIs, but it has passed on the responsibility to the Commonwealth Scientific and Industrial Research Organisation (CSIRO)’s digital innovation arm Data61.

In fact, the organization has already developed a version 1.0 copy of their data standards to support open banking and the upcoming Consumer Data Right legislation.

However, is it really true that open banking will help fintech companies and accelerate their growth? Let’s find out.

To Borsellino’s point, Australia isn’t the only one in the APAC exploring open banking — China, Hong Kong, Singapore, and India are at different stages of the process themselves.

Outside the APAC, there’s a big debate and lots of eyes on the possibilities that open banking creates, especially in Europe and the USA.

Studies from different regions across the world suggest that APIs can indeed help fintech companies significantly.

Way back in 2015, Alabama based BBVA Compass, for example, leveraged APIs provided by a fintech company Dwolla to provide real-time transfers.

As a result, account holders of BBVA Compass can bypass conventional networks and reduce the time it takes to clear payments — to seconds instead of the typical two-to-five business days.

Open banking, however, isn’t just for startups. It’s for all kinds of fintech companies. A popular accounting software provider, for example, is hoping to use APIs to help connect transactions to invoices and create new workflows for customers — making overall management simpler and auditing easier.

There’s no doubt that open banking can significantly help Australia. From the examples, we know that it’s not just the fintech ecosystem that will benefit, but also the banks — and ultimately the Australian customers. However, the next few months are crucial.

Before July, forging the right partnerships and creating the right (and secure) mechanisms to share data will help the regulation hit the ground running and make a big impact on the economy as a whole.